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CALIFORNIA CORPORATE & SECURITIES LAW

Would Glass Lewis Have Anything To Do If It Were Consistent?

Ralph Waldo Emerson famously derided a foolish consistency, famously writing in his essay, Self-Reliance: “With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it…

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Can A Corporation Be An Officer?

William & Mary Law Review recently published Professor Stephen Bainbridge’s article, Corporate Directors in the United Kingdom.  The abstract begins with the following observation: In the United States, state corporation law uniformly provides that only natural persons may serve as directors of corporations. I haven’t surveyed every state, but I concur as to California and Nevada. …

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FTB Publishes Disinformation About Corporations

Recently, I happened across a summary of the “key features” of a corporation on the California Franchise Tax Board’s website.  Recognizing that it is always a challenge to summarize accurately complex legal matters, I do beg to differ with some of the FTB’s assertions. A corporation must register with the California Secretary of State before conducting…

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Does ISS’ Voting Recommendations Reflect Analysis Or Consensus?

I always appreciate comments from readers of this blog.  One reader responded to yesterday’s post concerning ISS opposition to classified boards: “You seem to be under the impression that ISS comes up with its guidelines through academic research.  Although that CAN come into play, it is much more directly shaped by the policies of its customers.”…

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Is ISS A Board Declassification Denier?

Institutional Shareholder Services (aka ISS) recently published its 2018 Americas Proxy Voting Guidelines Update.  Among other changes, ISS will now recommend a vote against or withhold from the entire board of directors (except new nominees, who will be considered case-by-case) if the company has opted into, or failed to opt out of, state laws requiring a classified…

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Is Every Agent A Fiduciary?

In common parlance, a fiduciary is someone you can trust.  The word itself is related to the Latin word, fidere, meaning to trust.  We name our dogs “Fido” because dogs are trustworthy companions.  For example, a dog named Hachiko (忠犬ハチ公) faithfully returned every day for nine years to Shibuya Station in Tokyo to greet his master…

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Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply?

Yesterday’s post discussed one aspect of the California Court of Appeal’s opinion in Central Laborers’ Pension Fund v. McAfee, Inc., 2017 Cal. App. LEXIS 1008.  The case arose from Intel Corporation’s acquisition of McAfee, Inc., a Delaware corporation.  Among other things, the plaintiff complained that David DeWalt, McAfee’s erstwhile president and CEO, in pursuit of his…

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A Corporate Law Takeaway From Judge Nelson’s Ruling In Talcum Powder Case

Mg3Si4O10(OH)2 After a three week trial that included extensive expert testimony, a Los Angeles jury returned a $417 million verdict against Johnson & Johnson ($68 million non-economic and $340 million punitive damages) and its subsidiary Johnson & Johnson Consumer, Inc. ($2 million non-economic and $7 million punitive damages).  Johnson & Johnson Talcum Powder Cases, Los Angeles…

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Valid Reasons May Exist For Reincorporating In Delaware, But This Isn’t One Of Them

I am always interested in the reasons that corporations give when seeking approval to reincorporate from California to Delaware.  One company in a recently filed proxy statement made the following claim (among others): Enhanced Flexibility to Engage in Stock Repurchase Programs. The Company will have an enhanced ability to make distributions to its shareholders (i.e.,…

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“Person And Its Affiliates” – Can “And” Be A Disjunctive Conjunction?

Yesterday, I wrote about New York Judge Marcy Friedman’s opinion in Special Situations Fund III QP, L.P. v Overland Storage, Inc., 2017 N.Y. Misc. LEXIS 3878, 2017 NY Slip Op 32125 (Oct. 10, 2017).  The case involved a contract provision requiring a multimillion dollar payment in the event of a “specified transaction”.  The contract defined…

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